EADS Reviewing Revenue Goals

Aviation Week's DTI|Feb 22, 2013|by Andrew Compart

This article first appeared in AWIN First.

EADS is revising its goal for equal revenues from its civil and defense programs by 2020 after failing to finalize its merger with BAE Systems and accounting for cuts in government defense spending. But the European manufacturer has yet to decide on a new target and the future direction of its Cassidian defense business.

"There is nothing magical about the 50/50 [goal]," EADS CEO Tom Enders told Aviation Week after a Feb. 21 event at New York's Wings Club, adding that a new target will be determined after a strategic review is concluded.

During the luncheon, Enders said about 75% of all revenues are generated by EADS's commercial operations, and that those are growing. "That's a solid business," he said. "We're not in a bad position."

The company's strategic review will last a few more months, with completion mid-year after a new governance structure and influx of new board members is finalized in late March.

This review, though, will not consider another attempt at merging with BAE. "The two companies have moved on and need to move on," said Enders. "There's not much sense in looking in the rearview mirror."

Enders says EADS has become more risk-averse following its troubles with Airbus A380 production, instead adopting a "minimum-change approach."

With this approach, the manufacturer is minimizing airframe and cockpit changes on new aircraft, such as the A350, and focusing more on "aircraft engines and all the systems that are related to engines," said Enders. EADS also is increasing its emphasis on reliability, delivering aircraft on time with the promised operational ability.

"That drives us, where we can, to modify existing aircraft, rather than going into all new development with all the risks," Enders said, citing the Airbus NEO program as an example. An Airbus spokesman at the luncheon noted that the "minimum-change approach" also reduces the time to market, is less labor intensive and uses fewer engineering resources.

Enders is not ruling out a second engine option for the A350 beyond the Rolls-Royce Trent XWB should a manufacturer provide a good alternative, but says the lack of an option is not hurting sales of the aircraft.